Microsoft To Add Cloud Software To Enterprise Agreement Licenses

Microsoft will give customers the option of adding cloud software subscriptions to their Enterprise Agreement licenses beginning July 4, allowing customers to mix-and-match cloud and on-premise applications under a single EA contract.

The move could boost channel sales of cloud applications, which customers subscribe to today through a Web site portal.

For customers the new licensing option will provide increased flexibility, as well as make them eligible for a number of consulting, system monitoring and virtualization services through Microsoft's Software Assurance program, said Mark Croft, director of volume licensing product management, in an interview at Microsoft's TechEd 2011 conference in Atlanta Tuesday.

"This is a partner-led proposition," Croft said. "This keeps the LARs (large-account resellers) on top of the sales motion, whether it's on-premise or the cloud. It's where we see the LARs really expanding their [product] portfolio."

The new approach is also designed to remove licensing issues as much as possible as companies consider whether to adopt cloud software for some computing tasks, Croft said.

Enterprise Agreement licenses are for organizations with 250 or more users or devices. But Enterprise Agreement licenses currently cover only on-premise products. Customers subscribing to on-demand products such as Dynamics CRM Online, Intune or BPOS (Business Online Productivity Standard Suite) subscribed to the service through a Web portal – either with or without assistance from a Microsoft channel partner.

Starting with contracts renewed on July 4 and after, EAs can be written to cover both on-premise and cloud software, Croft said, with the cost of the contract adjusted to reflect the pricing of the on-premise and online products.

Given that LARs are the chief vehicle for selling software under Enterprise Agreements, adding cloud software to EAs should increase sales of cloud products through the channel, Croft said.

Microsoft hinted about its new licensing plans last year when it debuted Office 365, the cloud application suite that's slated for general availability later this year. But the company is offering more details as the effective date draws closer. The new licensing policy is also likely to be a major topic of discussion at Microsoft's Worldwide Partner Conference in Los Angeles the week of July 11 – one week after the policy takes effect.

The new policy will give customers more flexibility to mix purchases of on-premise and cloud software seats as their needs change, Croft said. "It's a more holistic view," he said.

It's also consistent with Microsoft's overall contention that most businesses will ultimately implement hybrid IT systems with both on-premise and cloud technology.

Subscribing to Microsoft cloud software using an EA will also give customers, and the partners they work with, more ability to customize contract terms -- something that isn't possible when subscribing to cloud software through the portal.

Another benefit for cloud software subscribers under an EA license, according to Croft, is that they will be covered by the Microsoft Software Assurance program. Croft said Microsoft has evolved Software Assurance to support cloud deployments, including developing new deployment planning services for cloud systems.

And a new cloud-based systems monitoring service called System Center Advisor, for improving system uptime and performance of on-premise servers, will be available through Software Assurance by the end of the year.